ASTL:CC - 3 Stocks That Are Fantastic Deals Right Now
2023-08-16 09:30:00 ET
Investors have different definitions for what they consider a “fantastic deal.” Some investors only consider undervalued stocks good deals. In contrast, others might focus on discounted stocks or companies that are ignored by the bulk of the market and have great potential, even if they are not undervalued per se. Currently, at least three stocks might be considered fantastic deals by most investors.
A vehicle dealership company
AutoCanada ( TSX:ACQ ) has a network of 65 auto locations and over +15,700 vehicles in its inventory. The company has agreements with several major brands both in Canada and the U.S., which adds to the appeal and long-term financial viability of the company. Collision repair is also an extensive part of the business.
One major reason why AutoCanada is a fantastic deal right now is its finances are currently unmatched by its market value but in a good way. Its revenue from the last quarter is almost three times the size of its current market valuation, and its enterprise value-to-sales ratio is barely 0.4. It has also experienced a strong positive uptick in the last couple of months, and the current momentum may carry the stocks to new heights.
An energy stocks
Even though a lot of energy stocks are currently quite undervalued, Parex Resources ( TSX:PXT ) is a cut above the rest for a couple of reasons. The first reason is its long-term growth history. The stock has gone through numerous cycles of ups and downs over the decade, but the overall direction has mostly been up, and the stock has returned over 360% to its investors through price appreciation alone.
This growth is unique in the energy sector because the 2014 slump has been devastating to the 10-year returns of the bulk of the energy sector, and Parex was one of the handful of energy companies that escaped that fate.
That is probably tied to the second reason this undervalued stock is currently a great deal — its international operations. Parex is one of the largest energy companies in Colombia and has a massive land position, which strengthens its long-term potential.
A steel company
Algoma Steel Group ( TSX:ASTL ) is currently modestly discounted and undervalued, which makes it a good deal from a valuation perspective. The discount has also helped improve the company’s current dividend yield and pushed it up to 2.5%, but that’s hardly impressive.
The reason Algoma might be a steal at this level is because of the transformation it’s going through — from a conventional steelmaker to an electric-arc steelmaker.
This transformation won’t just increase the company’s production capacity, it will significantly lower carbon footprint, and the steel produced using electricity would be significantly “greener” compared to conventionally produced steel. This may make it more desirable for a wide range of Algoma’s potential customers that are concerned about the emissions associated with their raw materials and supply chain.
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Foolish takeaway
The three companies are attractively valued right now and may have compelling long-term and short-term growth potential. This combination of valuation and potential is worth considering for a wide range of investors, especially value investors on the lookout for fantastic deals.
The post 3 Stocks That Are Fantastic Deals Right Now appeared first on The Motley Fool Canada .
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Parex Resources. The Motley Fool has a disclosure policy .
2023